Divorce Can Be Costly, Especially For Wealthy Palm Beach Residents
December 10, 2013 § Leave a comment
Marriage is complicated and divorce is expensive, both financially and emotionally. Add a second (or third) marriage and issues can quickly spiral out of control.
Multiple marriages are common in wealthy communities like Boca Raton, Palm Beach, Palm Beach Gardens, and Jupiter. The gated communities of PGA National, BallenIsles, Mirasol, Bear’s Club, Ibis and Frenchman’s Creek are filled with complex family situations. A divorce can upset financial and social relationships in unexpected ways.
As a NY licensed attorney with a history of having tried some high profile matrimonial and custody cases, I have never seen a divorce case that was not expensive financially, emotionally or both. As a financial advisor, I have seen firsthand, the devastation that a “knock down” fight can wreak on a family’s finances. And it’s much easier to get a divorce today than even a decade ago.
Most country club communities in the Palm Beaches region are very tightly knit, and a divorce affects not just your family but also your extended “country club” family. One client and his wife had lived in a gated community for 15 years and participated in many clubhouse events, including golf tournaments. When they divorced, the man’s golfing buddies rallied around him, and the other wives defended her. However, they each received fewer and fewer social invitations, and eventually both moved to different communities.
Being single in a couples-oriented environment is awkward. Even more troublesome is the fact that sometimes people begin looking at you as a potential threat to their marriage.
On the financial side, splitting assets should be a simple matter that doesn’t cost too much. Too often, though, one party thinks they have been wronged and wants to punish the other person. If one attorney intentionally inflames the situation, costs can escalate quickly.
The way to head off these potential headaches is to take the time and effort to pre-plan, especially before a second or third marriage ceremony. Here are three basic issues you must address before walking down the aisle:
The first issue is to gain a clear understanding of the expectations of your new spouse, your children, and others who may be affected by your new relationship. There are ways to structure your estate to provide for your new spouse and distribute assets to your children as well in case of your death, while still preserving estate tax benefits.
Craft a pre-nuptial agreement
Pre-nups are very difficult to break, as long as they are set up correctly. Each party must be represented by a knowledgeable attorney, must give full financial disclosure, and must have equal bargaining power. Pre-nups are emotionally charged. Find an attorney who sees the pre-nup as a way for the parties to establish their respective positions going into the marriage, so that it becomes an experience that strengthens the relationship. Ask your friends for a good attorney, or contact the American Academy of Matrimonial Lawyers.
Plan for death or disability
Providing for your family members when you are no longer in the picture requires a good financial planner and a good attorney. They need to understand current law and make it a priority to regularly review and update your estate plan, always keeping tax issues at the forefront. In one case, a large landowner with two children found out he had only a few months to live. Rather than ensure his estate was set up correctly, he went on a spending and partying binge before winding up in the hospital and dying. His children ended up working for the next 10 years to pay off $20 million in estate tax payments that could have totaled less than $6 million with proper planning.
You can be financially successful yet fail to leave a legacy of success. Marriage and divorce affect every aspect of your life, so plan accordingly and enjoy your success with full confidence in the future.